None On January 4, Year 1, Barber Company purchased 8,500 shares of Convell Company for $102,000. Convell Company has a total of 42,500 shares ofcommon stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years,Convell declared and paid cash dividends of $0.75 per share, and its net income was $93,000 and $88,000 for Year 1 and Year 2, respectively.The January 2, Year 3, entry to record Barber's sale of 5,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for$68,850 cash, should be:Multiple ChoiceОDebit Cash $68,850; debit Loss on Sale of Investment $6,420; credit Equity Method Investments $75,270.ОDebit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $81,600.Debit Cash $68,850; credit Gain on Sale of Stock Investment $12,750; credit Equity Method Investments $56,100.Debit Cash $68,850; debit Loss on Sale of Stock Investment $35,550; credit Equity Method Investments $102,000.

Journal entry is the first stage of the accounting process.Journal entry is used to record business…

Answered: Multiple Choice О Debit Cash $68,850;…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter19: Corporations: Distributions Not In Complete Liquidation

Section: Chapter Questions

Problem 1BCRQ

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On January 2, Year 1, Barber Company purchased 6,100 shares of Convell Company for $71.720. Convell Company has a total of 30,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $83,000 and $78,000 for Year 1 and Year 2, respectively. What is the book value of Barber's investment in Convell at the end of Year 2? Multiple Choice S61.350. $102.920.
On January 4, Year 1, Barber Company purchased 13,500 shares of Convell Company for $162,000. Convell Company has a total of 67,500 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.75 per share, and its net income was $123,000 and $118,000 for Year 1 and Year 2 , respectively. The January 2, Year 3, entry to record Barber's sale of 8,100 shares of Convell Company stock, which represents 60% of Barber's total investment, for $109,350 cash, should be: Multiple Choice Debit Cash $109,350; debit Loss on Sale of Stock Investment $9,510; credit Equity Method Investments $99,840. Debit Cash $109,350; credit Gain on Sale of Stock Investment $20,250; credit Equity Method Investments $89,100. Debit Cash $109,350; debit Loss on Sale of Stock Investment $57,050; credit Equity Method Investments $162,000. Debit Cash $109,350; debit Loss on Sale of…
Kramer Corporation had the following long-term Investment transactions. Prepare the journal entries Kramer Corporation should record for these transactions and events. Jan 2 Purchased 5,000 shares of Optic, Inc. for $42 per share plus $7,000 in fees and commission. These shares represent a 35% ownership of Optic. Oct 15 Received Optic, Inc. cash dividend of $2 per share. Dec 31 Optic reported a net income of $66,000 for the year.
Cosmos Corporation had the following long-term investment transactions. Year 1 January 2 Purchased 5,000 shares of Visual, Inc. for $42 per share. October 15 Received Visual, Inc. cash dividend of $2 per share. December 31 Visual reported a net loss of $66,000 for the year. Year 2 February 2 Sold 5% of the shares of Visual Inc for $7000. Prepare the journal entries Cosmos Corporation should record for these transactions and events.
On January 1, Vienna Corporation purchased 40% of the outstanding common stock of the Marietta Corporation for $137,500. During the year, Marietta Corporation reported net income of $50,000 and paid cash dividends of $25,000.The balance of the Investment in the Marietta Corporation account on the books of Vienna Corporation at year-end is: Select one: A. $147,500 B. $135,000 C. $100,000 D. $110,000
Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments.Year 1 January 5 Selk purchased 40,000 shares (20% of total) of Kildaire's common stock for $1,400,000. October 23 Kildaire declared and paid a cash dividend of $3.80 per share. December 31 Kildaire’s net income for the year is $1,170,000, and the fair value of its stock at December 31 is $42 per share. Year 2 October 15 Kildaire declared and paid a cash dividend of $2.70 per share. December 31 Kildaire’s net income for the year is $1,181,000, and the fair value of its stock at December 31 is $46 per share. Year 3 January 2 Selk sold 2% (equal to 800 shares) of its investment in Kildaire for $67,400 cash. Assume that although Selk owns 20% of Kildaire’s outstanding stock, circumstances indicate that it does not have a significant influence over the investee.Required:Prepare journal entries to record the preceding transactions and events…
Selk Steel Company, which began operations in Year 1, had the following transactions and events in its long-term investments. Year 1 January 5 Selk purchased 60,000 shares (20% of total) of Kildaire's common stock for $1,560,000. October 23 Kildaire declared and paid a cash dividend of $3.20 per share. December 31 Kildaire's net income for the year is $1,164,000, and the fair value of its stock at December 31 is $30.00 per share. Year 2 October 15 Kildaire declared and paid a cash dividend of $2.60 per share. December 31 Kildaire's net income for the year is $1,476,000, and the fair value of its stock at December 31 is $32.00 per share. Year 3 January 2 Selk sold 3% (equal to 1,800 shares) of its investment in Kildaire for $54,200 cash.
XYZ, Inc. owns 2,500 of the 10,000 outstanding shares of the common stock of ABC Corporation. The stock was originally purchased on January 1, Year 1 for $5 per share. During the year, ABC earned $100,000 in revenue and paid out dividends in the amount of $40,000. At December 31, Year 1, the stock is valued at $6 per share. By what amount should the Investment in ABC Corporation account increase as a result of this year's transactions? $10,000 O $25,000 O $15,000 O $2,500
At the beginning of the year, Corporation A purchased 8,000 shares of Corporation B's common stock for $40 per share. B reported net income of $120,000 for the year and paid dividends of $45,000. As of December 31, the market value of B's common stock was $42 per share. Assuming the shares owned by Company A represent 10% of the total outstanding stock of Company B, how much income should A report from its investment in B for the year if the shares are considered trading securities? $4,500 $12,000 $20,500
On January 1, year one, the Miller corporation purchased 300, 000 shares of the Mayfair corporation for $ 5.7 million. The investment represented 30% of the Mayfair corporations outstanding common shares during year one Mayfair reported net earnings of $2.25 millionAnd paid a cash dividend of $.15 per share. During year two, Mayfair reported a net loss of $180,000, and again paid a dividend of $.15 per share. Calculate the book value of Miller's investment and Mayfair as of December 31, year and December 31, year two.
Draft Co. purchased 14,00 shares of Hamburg Corporation's 40,000 shares of common stock on January. 1. This representd 35% of Hamburgs outstanding shares and gave Drafts Co. significant influence over Hamburgs management and operations. On october 11, Hamburg declared and paid cash dividends of $30,000. On December 31, Hamburg reported net income of $125,000 for the year. Prepare the journal entries Draft Co. should record to account for the dividends receieved and the earning reported by Hamburg Corporation.
Bellows Inc. purchased 10,000 shares of Nesbitt Inc.’s common stock for $7.50 per share. Nesbitt Inc. has 100,000 shares of common stock outstanding. What account and amount is debited by Bellows Inc. to record the investment in Nesbitt Inc.? Assuming that Nesbitt Inc. paid a dividend of $0.40 per share, what account and amount is credited by Bellows Inc. to record the receipt of the dividend? 3 If Bellows Inc. sold 4,000 shares of Nesbitt Inc.’s common stock for $9.00 per share, how much gain on the investment would Bellows Inc. recognize?

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